David Cameron has reportedly downgraded his demands for Britain to be excluded from EU employment laws.
The Prime Minister was said to be pushing for opt-outs from all employment and social regulations as part of a renegotiation of membership terms ahead of an in-out referendum.
But according to the Financial Times, he is now prepared to settle for more limited protection for flexibility in the UK labour market. Officials are said to be keen to ensure the working time directive does not harm the economy.
A Downing Street source dismissed the report as "pure speculation", saying they expected "lots of noise" around the process.
Mr Cameron will this week travel to Portugal and Spain for talks with counterparts in a bid to make progress with his agenda.